As recently as this afternoon Sam Allardyce was seeking new players to bring to St James's Park - tonight, however, he must instead begin seeking a new job, after parting company with Newcastle "by mutual consent".

Allardyce's position had been in jeopardy even before the start of the season, as the club's new owner, Mike Ashley, was rumoured to be keen on replacing him immediately. Ashley had not been involved with Newcastle when previous chairman Freddy Shepherd enticed Allardyce from Bolton last May. The manager was, however, entrusted with substantial transfer funds during the summer and began the season positively, winning 3-1 at his old stomping ground in Bolton.

Performances soon dipped, however, and doubts were raised not just about the quality of his signings, but also about Allardyce's style, with fans nonplussed by a strange lack of cohesion in the team and the manager's insistence on playing players such as Alan Smith in unaccustomed roles. The pressure intensified over Christmas, when Newcastle took just one point from four games - and that at home to rock-bottom Derby, who, back in September, recorded their first and so far only win of the season by deservedly beating Newcastle 1-0 at Pride Park.

"The decision has been reached by mutual agreement," said club chairman Chris Mort in a statement on the Newcastle website. "Mike and I would like to place on record our thanks for Sam's efforts and wish him well for the future. A new manager has not yet been appointed at Newcastle United, we will make a further announcement on that issue when appropriate."

Sam Allardyce said: "I am disappointed to be leaving but I wish the club all the best for the reminader of the season and the future."

First-team coach Nigel Pearson will be in charge of Newcastle for this weekend's trip to Manchester United. Although sources close to Alan Shearer say he is unlikely to become manager, he is favourite to take permanent charge of the team. Shearer is 4-7 with the bookies, Martin Jol 7-1, Terry Venables 8-1, Jose Mourinho 12-1, while former England manager Steve McClaren is an outsider at 16-1.